Today, we issued our 18th annual Iowa Employer Benefits Study© results. As with past studies, the wealth of data is immense. This year’s study found that Iowa employer health insurance premiums increased an average of 8.0 percent from 2015 to 2016.
The 8.0 increase is an average that factors in employers receiving no rate change, an increase or decrease in their health premiums. This number represents the average increase in premiums employers received PRIOR to making design changes to their medical plans – such as increasing cost-sharing arrangements with employees. After modifying the plan design, the net increase over the past year was 5.9 percent for single premiums and 0.5 percent for family premiums.
The 2016 Iowa Employer Benefits Study© found that average annual premiums for employer and employee contributions (combined) were $6,509 for single coverage and $15,703 for family coverage. Since 1999, the year this study began, the single premium has increased by 215 percent while the family premium has jumped by 186 percent.
In the six years (2005-2010) prior to the passage of the 2010 Affordable Care Act (ACA), family health premiums for Iowa employers increased by nearly 31 percent. During that same period, contributions by employees with family coverage have increased by 23.5 percent.
During the post-ACA period (2011-2016), total family premiums increased by 18.4 percent, while employees with family coverage experienced a nine percent increase during that period.
How did Iowa employers respond? Interestingly, they avoided ratcheting up employee cost-sharing arrangements, such as increasing employee premium contributions and plan-sharing responsibilities, such as higher deductibles. Iowa employees were asked to contribute an average of $93 for employee-only coverage, similar to 2015. Employees with family members are asked to pay over $403 a month, a slight decrease compared to last year. Over the course of 18 years (1999-2016), employee contributions have increased by 150 percent for single coverage and 128 percent for family coverage.
It is interesting to note that deductibles remained statistically unchanged in 2016. In part, this is most likely due to the employer’s desire to maintain a competitive health plan offered in a labor market that has a relatively low unemployment rate. The average 2016 deductible for single coverage required by Iowa employees is $1,627, while the family deductible is $3,382. Despite the glacial change in this year’s deductibles, deductibles for both single and family have risen by 188 percent and 185 percent, respectively, since 2004.
In the six years (2005-2010) prior to passage of the ACA, single and family deductibles have increased 66.3 percent and 71 percent, respectively.
The post-ACA period (2011-2016) reveals the deductibles have only gradually increased for single and family, 8.6 percent and 6.3 percent respectively.
Understandably, employers do not like to experience increasing premiums, as it causes a reaction that is upsetting to both employers and employees alike. Higher premiums negatively impact salary adjustments, in addition to causing infrastructure investments and profitability tensions. With this said, the employer market is considerably more stable than what is currently happening in the individual insurance markets, both in Iowa and nationally.
When considering future health plan purchases, Iowa employers ranked the importance of 13 features that would impact the coverage they ultimately embrace. Affordable cost, employee satisfaction, offering comprehensive benefits and quality customer service are the top four features important to employers.
The above information is just a small fraction of our survey results. The complete 2016 Iowa Employer Benefits Study© is available for purchase and download at this site.
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